Everything Old Is New Again... Again

from the haven't-we-seen-this-before? dept

Is there some sort of rule that when discussing "new" dot com companies, the press is supposed to ignore the fact that they're nearly exact replicas of companies that were around during the first internet bubble? Or, even worse, are perfect replicas of companies already around? The latest is about a company called LaLa that is apparently positioning itself as a way to get "nearly free music." The specifics, however, show that this looks quite similar to plenty of other business models -- most of which didn't work. But that doesn't stop the press from writing glowing stories on the company that ignore both the inherent problems in the model as well as those who have gone before it. In this case, the company is simply a swapmeet. It lets users list CDs they own which they can then trade with other users for a $1 per trade for each CD received (and, you can only get CDs if you also give out CDs). This isn't a new idea by any stretch of the imagination. During the bubble years there were a bunch of online swap sites, and they all pretty much disappeared. However, if this company sounds familiar, that's because its model is identical to Peerflix, a company that launched last year -- except for DVDs instead of CDs. As we pointed out last year, there's a fundamental problem with the Peerflix model: people want to keep the good DVDs they have, while they're willing to trade the bad ones. In other words, markets like this get filled up with bad-to-mediocre content, rather than anything worthwhile. Also, while the article talks about "nearly free music" that's extremely misleading. First of all, you have to offer up your own CDs, which you paid for at some point (in most cases). Finally, while the article also notes that this is "legal," it leaves out the fact that if you trade your CDs while keeping ripped copies of the song, then you're no longer in such good legal shape. And, of course, given the recording industry's historic view towards any such activities, it seems unlikely that they'll look kindly on this offering.

No Subject Given

On their site they do say,"I ask you to do your part by doing the right thing: remove songs from your iPod or PC if you've agreed to send the CD to another member."Of course everyone here's right, no one using the service will delete their songs. I've never even heard of this site, so their advertising only came from this article, so i can't imagine many people will look at it.

Why?

One man's junk

While I agree that many of the websites a poor re-treads of failed ideas, I'm not sure that you'll turn out correct when it comes to Peerflix. All you have to do is have had one, mildly successful garage sale to know that one man's junk is another man's treasure.Jim

Movies traded on Peerflix

We have seen on Peerflix that the concept of 'good' movies is relative. While it is indeed true that new releases tend to have higher demand than supply in the first few weeks after they reach stores, most other movies grow to have large lists of both 'wants' and 'haves' over time. Contrarily to music, most people do consume their dvds in small dosis, i.e., they are watched once or twice, not 10 or 20 times. And once they're watched, they are no longer valuable. For example, you can get Mystic River, Ali, House of Sand and Fog right away on Peerflix today. I don't know about your taste, but those are good movies to me.

grt debate - fr. founder of 'la la'

Alright, take a deep breathe and give me a shot to explain 'la la'.

First, it's not about just trading CDs. It's definitely not about getting a CD, ripping it, and trading it on - if you do this you might as well use a file trading site b/c what you're doing is not right.

'la la' was created so we'd all have more choices in music. There are 3m CD titles, less than 150k are available on iTunes and digital music services. The use of CDs is to help us access the full catalog.

Every CD that you trade on 'la la' results in 20% going back to the artists. No other site online or used record store does this. Instead, they choose to rip-off artists for their work. It's not cool and it's definitely not right.

If you think we're going to fail, I've got six other start-ups in my history (3 IPOs, 3 M&As, and another going strong) that says 'la la' is going to make.

Don't over analyze the business model - I didn't. I started 'la la' because I hate buying music from Wal-Mart and I wanted to help artists.

We also sell new CDs and digital full albums (no singles - don't believe it's right) to complete trading.

I'll get off my soapbox, but I'll offer anyone who can drop by Palo Alto for a milkshake. I'll walk you through the service, introduce you to some of the folks, and if you still feel this is lame then I'll buy you any CD you want.

Try to take 'la la' at face value that we're working non-stop to bring back the great experience when record store were independent and there were choices in radio.

Re: grt debate - fr. founder of 'la la'

Bill,

Thanks for coming here and responding to some of the points. However, I'm a bit confused by some of the statements.

'la la' was created so we'd all have more choices in music. There are 3m CD titles, less than 150k are available on iTunes and digital music services. The use of CDs is to help us access the full catalog.

That sounds good in theory, but breaks down when you think about it. Using iTunes as your base is wrong. You need to use other sites that sell CDs... and these days you can really find just about any CD online, whether new or used. And, if someone has a used CD that isn't findable, why will they use your service rather than something like eBay?

Every CD that you trade on 'la la' results in 20% going back to the artists. No other site online or used record store does this. Instead, they choose to rip-off artists for their work. It's not cool and it's definitely not right.

This seems like a nice gesture, but doesn't make any sense. The artist already made their money from the sale of that CD. They no longer have any claim to it. That's the basis of the right of first sale. Are you really suggesting that it's "not cool" and "definitely not right" to sell a CD that you bought without then paying the artist as well? That goes against the entire concept of the right of first sale. Why should the artist get paid twice?

If you think we're going to fail, I've got six other start-ups in my history (3 IPOs, 3 M&As, and another going strong) that says 'la la' is going to make.

No argument there. You've obviously done a great job in the past and have a ton of experience. However, I'm still not convinced of the business model. I'm also not convinced that past successes necessarily mean future successes. I've seen too many successful entrepreneurs fail in later attempts to believe it means much of anything.

Don't over analyze the business model - I didn't. I started 'la la' because I hate buying music from Wal-Mart and I wanted to help artists.

I guess this is the statement that confuses me most of all. Why shouldn't we analyze the business model? And why didn't you?

Also, what does Wal-Mart have to do with this? It doesn't seem like you're competing with Wal-Mart at all, but used record stores. Also, it's still not clear that this really helps artists very much either.

Finally, considering that many people feel that CDs and albums are a dying breed, it seems odd to try to start a business focused on them.

I wish you the best of luck, and hope that you'll prove me wrong. However, as of right now, I just don't see how this works long term.

Re: grt debate - fr. founder of 'la la'

I had a feeling this thread was going to make it to someone at lala. Bingo, the founder gave us his piece of mind. Thanks Bill, very cool of you. It makes me feel special.

I personally didn't over analyze your business model. What I did was associate the following words : used-CD, trading, online, 1$. Then I took a look at the general stance of the people that surround me (ie- music lovers, rippers, leachers) and made my comment (1st comment on list). I find lala to be a sinking ship, a beautiful one, but with a hole in the hull.

This statement sticks out - "It's definitely not about getting a CD, ripping it, and trading it on - if you do this you might as well use a file trading site b/c what you're doing is not right." My point is, exactly! Many people don't care about being right or wrong. My feeling is, this is how many people are going to use lala and to all appearances there is no way for you to control it. Thus lala stands on very dangerous grounds. I can smell a lawsuit already. You are protecting yourself with the 20% back to the artist stance, but will it suffice?

What about people trading in fakes? I can fake a cd and make it look like it originally came out of the package in my own home. Of course this is an exchange website, which tames the malevolent incentive. But this particularity does not rule out the possibility. Another potential lawsuit.

I have no doubt that there is a genuine interest in your services, that your crew is worthy and that your milkshakes alone are worth the visit. I am simply aware that a good chunk of people out here don't give a damn about paying for music, and as long as they exist, lala will have to face them, and very possibly take some blame too.

Re: grt debate - fr. founder of 'la la'

I really should be working, but I'm totally into this discussion. I'll try to answer the best I can:

a) You're right on the comparision, we'll get the stats for online new/used music stores. I'm sure the gap will close but it will still be significant.

With music, getting the CD is one problem but finding what you want is even harder. 'la la' search is built by some amazing folks and it will help you discover music through other members and through community search. You have to try it to see the difference.

Once you find it, 'la la' has trading, purchase new, and soon integration into local record stores. Think of it like FedEx, the more you're willing to pay the faster you get it. You can always just 'la la' the CD for $1 but you'll have to wait - that can be anywhere from 3 days to a couple of weeks.

b) Musicians don't make much from new CD sales. In many cases they net less than $.20 per CD. We give to musicians b/c we want to encourage more music. The part that I think is not 'right' is taking a CD, ripping, and then trading. It may be legal somehow, but it doesn't pass the ethical test for.

c) Combining the past success and the model of 'la la' into one thread, I've been fortunate because I've always built stuff I loved not because I love a business model. It sounds goofy and a lot like a high-school counselor, but I make better choices for my customers when I'm building it for me.

The business should work because people enjoy music and want to discover new music; places like Wal-Mart cannot provide the diversity necessary for selection (Irish dance, hip hop from Iraq, classical, etc.)

If we become the right place for discovering music, we should own the lionshare of fulfillment. The network effect is very helpful for trading of course. Search, discovery, and purchase in one place - doesn't seem like it's done anywhere else for music.

Last note on the musician contribution - maybe you're right - I just want to do it b/c music makes me happy and I want to support the artists. I just did it because I wanted to - no real logic :-)

Swing down to Palo Alto - this could be a long conversation. Ping me and I'll get an invite code for Techdirt readers. We'll take the debate to our playground.

Re: grt debate - fr. founder of 'la la'

Wonderful analysis and feedback. I think the fun in creating a company is changing perception. Napster made it cool to steal, maybe 'la la' makes it great to do the right.

When I was in college, I loved concerts and went to them all the time. Now that I've got a family and a job again, I miss the feeling of being around people that love music.

I'm going to leave it up to the RIAA to root out the criminals - I'm not up to defeating them. I'm more interested in music fans that went to file sharing b/c the music store didn't have anything they wanted.

If we make it (and most start-ups do not), we'll get there by expanding the music market. If we make it, I can tell my 16 mo. son one day that we took this crazy position and made something out of it.

No kidding, email me at billn@lala.com and we'll grab a milkshake. I start converting people one at a time :-)

Re: grt debate - fr. founder of 'la la'

There are at least 2-3 critical data points that this company will have to investigate a whole lot further to succeed or frankly to survive.1.) Swapping CD's is not covered under "fair-use" in the eyes of the holders of the Master Recording rights nor the Publishers...and they will come knocking, if your not familiar with this issue, you should quickly speak with a knowledgable ent law specialist like Elliot Groffman.One C&D from a multi-billion dollar ent company can really ruin your day.2.) "Paying the Artists" - - There is no such thing in the music industry. Let me know where you will mail the check > performace Rights Groups, Publishers, Masters Holders...and by the way if you pay one you set precendent and the others will want their cut...very slippery slope, and the death-rattle for many a start-up< br>3.) "Helping people buy music" (recommendations from the community etc.)That's a neat feature not a product [see music buddha, gigabeat, Savage Beast, Cantametrix,Siren Systems...etc.], a couple of things to look at in the market - calculate the TOTAL revenue generated by AMAZON"S affiliate marketing program, now estmate that only 20% represents music. Next, realize that every single online music vendor, iTunes/Napster/REAL/MSN are TODAY building social networking feature around their online music stores, the reason why they will succeed big is because they already have all the critical data needed to deliver a meaningful product i.e. What music do you own, what music do you listen to, what music do you browse.....anybody else will have to work their tail off to get people to volunteer that data...hard-sales-pitch.*** Finally, I would really love to see the PowerPoint Pitch that secured the $9M, because somebody has some incredible Jedi Mind Trick power here - either that or the real model is to sell porn behind the music section.of course...these are all the reasons you should power ahead, knock'em dead and totally ignore all the dead-bodies littered across this particular sector :-)

Re: grt debate - fr. founder of 'la la'

"iTunes/Napster/REAL/MSN are TODAY building social networking feature around their online music stores, the reason why they will succeed big is because they already have all the critical data needed to deliver a meaningful product.what social networking features are they building? also what % of overall music sales do they account for?doesn't seem like they are have a maassive user base and aren't really connecting people

Re: No chance in hell

In Germany Hitflip is a lot more than what Lala pr

German Service Hitflip offers not only the trading of music CDs but also DVDs, audiobooks, console games and computer games. It has been online and successfull for months so what's all the buzz about Lala?

LALA rocks!

LALA is awesome. First of all, cd's are quite different thatn dvd's in that you can put them on your ipod and trade cd's you like! With the new mp3 era, people really don't need to keep any cd's any more. Additionaly, the site is very user friendly, and I have received dozens of awesome cd's and sent out not nearly as many as I've received. This site is amazing! check it out!!!! www.lala.com, or e-mail me for an invite.

I think it'll work, at least near term, because of

Just look around at all the racks of CDs your friends have. What are they going to do with that investment? Trade them in for a buck or so and then buy one used CD for $6.99?

So for $1.49 I can swap 1-for-1 a CD I'm done with for another one I want. I then have a physical CD to rip for home or player, use in other home systems, take to car, take to work, take to friends, take in a friends car for a roadtrip, etc. It's easy and the process is familiar to a lot of people with Netflix's and Blockbuster's success. lala.com doesn't take inventory, except for mailing envelopes and pockets a bunch off each swap. Seems like a service that'll make some money.

Sure you can rip your whole collection, put it on an ftp server and swap music for virtually free with your "friends," but that's a big step for even me, let alone the less technical folks, who make up the vast majority. Plus how long do you really think it will be until most can shuffle music from home to phone to portable player to work to friends to car, etc. I'm in the Internet biz, as are many of my friends, and I'd say less than 10% of the people I know have a home digital jukebox set up, maybe half of those can port music to their cars (usually through FM kits). The physical CD will still be around for at least a decade.

Usually /I/ overthink these things. Yes, pure digital everything is the way it /will/ be, but we always see a much slower broad adoption than we "visionaries," industry folks and early adopters like to think. Yes, iTunes is a great look at how all (or most) music will be distributed. And I know a lot of VCs are looking for the next one of those. But how many people thought digital movies, and movies on demand was the way of the future and passed on that dull, "so last decade" idea of mailing around actual physical DVDs? Bet they'd like to go back and get in on Netflix now.

As long as longevity and revenue isn't dependant upon people deleting the music from their collection when they mail out a CD... but even this acknowledgement doesn't mean lala.com will fail because other Napster-esque sites exist. The /key/ is that CDs, and CD playing technologies, will be around and lots of us >= gen x'ers have a lot of CDs.

Lala is working...

It works great. I've gotten dozens of CDs that I didn't think I could find, CDs I would've had to pay $10 to $20 for, with shipping.

I also joined peerflix on the same day I joined Lala, and to date, I have received abou 80 CDs that I've wanted from Lala, and NOT A SINGLE DVD (excluding the freebie they send you when you pay) from peerflix. On peerflix, I sent out three DVDs, thinking their model would work as well as Lala's, but I have yet to receive anything from a single peerflix member.

Lala has some huge minds behind it. Anselm, for one. Google him. He's done loads of free work benefiting the Internet community. These people are for real, and the experience is great.

FREE is better

Great service...good people...owners head is still small enough to fit through his office door unlike bill at lala.

I love how the lala guy bill acts like he really cares about music and the artists...come on now. Someone else asked this so bill how do you plan on paying the artists? What if some lame CD only gets traded once? Are you going to pay them? Do the artists get to select how often they get paid? Like minimum $50 and you cut a check the 15th of every month? HAHA...this giving back to the artists sell is a joke and you know it.

I suppose Lala might work if the RIAA manages to scare people from downloading, so that they will look for a safe alternative. Now, if they succeed ni reducing downloads (unlikely), they will probably try to come after sites like Lala too.

La La works for me

I've been a member of LaLa for about 2 weeks and it has worked well for me. My collection of CDs is good quality (I think), but really old, primarily from the 80's and purchased used. People have snapped up my oldies, which I've gotten tired of and don't listen to. Because the LaLa site is easily searched and well organized, I have been able to identify, request, and promptly receive out-of-print albums frorm my favorite artists that are no longer carried in record stores. I actually WANT CDs that others have gotten tired of. LaLa meets my needs nicely, and I'm willing to pay more. Yes, I could in theory keep a ripped copy, but why bother? I wouldn't listen to it anyway because I'm listening to the new-to-me CDs I received in trade.

Re: Lala is working...

Absolutely! I've been on lala for a month and traded 50 CDs in or out. I am getting a lot of GOOD albums. Not bad to mediocre. I don't know what makes lala different from those that have failed, but as far as I can tell, the feeling of people who are using seems to be that it works great.

Re: Lala is working...

I've been using the site for a while, and I expected the same thing, but it seems to be working. To expect the supply of tradable CDs to run out makes sense only if all users have the same view of what a good CD is.
I can't believe how fast some of the CDs that I thought would never trade actually traded, while other ones that I thought were good just sat on my list.
Here's my $.02 on the system:
http://dyers.org/blog/archives/2006/06/08/lalacom-cheap-easy-cd-trading/

Re: No chance in hell

Why do you think it will cost 3 dollars to ship, it won't...

That being said- you all should check out a concept (not yet a functioning site) called neighborrow.com. The concerns about people only listing the crap are eliminated because here you are sharing and borrowing from neighbors, real ones and virtual ones. Some transactions are truly free, since there is no shipping and generally no per trade costs...

Is it a business? Time will tell.

It's fascinating reading this whole thread strecthing back to March while I'm typing her in October.

I joined LaLa at the beta stage, and it's gotten better and better every month.

LaLa has become the way I discover and acquire new music.

Perhaps because I'm nearly 40, I don't use the community features all that much, but the vibe is really friendly -- without being too crunchy.

The service has grown a lot over the past few months and its ease of use has improved dramatically and the Netflix-like queue system employed significantly mitigates any perceived "waiting" for a wanted CD. In my experience a sufficiently loaded list produces a few new CDs a week.

LaLa has really throught through and deployed a consistent user experience all the way through to the materil they send you to fulfill the shipments. Again, taking a page from Netflix, but who could blame them?

In a previous life, I launched a music site myself, so this topic is near to my heart, or at least near to some briuses in that region. I think that the value created by reaching critical mass and sustaining the chain reaction in the community is the key hallmark of LaLa (as it is for eBay, Digg, MySpace, YouTube, etc.). The newly-deployed commerce features of the site, however don't strike me as the thing that will turn it into a money machine.

Wow, wish I wasn't so dependent on spell check!

Re: user appeal

ripping them is not the right thing to do. The fair use and first sale laws are changing, but you are not allowed to copy anything and sell, give or trade it. However, you are allowed to RECORD something and do what you want with it. But when you buy content, whether it be cable, music or movies, you are buying one recording or "copy" This does not permit "copying" the content. I hope this helps